Hong Kong Passes Stablecoin Bill With HKMA Oversight, Six-Month Grace Period for Fiat-Backed Issuers

The Legislative Council of the Hong Kong Special Administrative Region passed the Stablecoins Bill on May 21, 2025, establishing a licensing regime for fiat-referenced stablecoin (FRS) issuers in the city. The law is expected to come into effect later in 2025, with a six-month grace period for issuers to comply.

Under the new ordinance, any entity seeking to issue fiat-backed stablecoins in or tied to Hong Kong dollars must obtain a license from the Hong Kong Monetary Authority (HKMA). Licensees are required to meet operational standards including reserve asset management, redemption at par value, segregation of client assets, anti-money laundering controls, risk management protocols, disclosure obligations, and fitness and propriety standards. Only licensed institutions may issue and market stablecoins to retail investors, and unauthorized offerings will be banned.

The bill adheres to the ‘same activity, same risks, same regulation’ principle, and HKMA oversight is mandated. HKMA will conduct further consultations on detailed requirements, and transitional provisions are included to help issuers adjust to the new regime. The law follows recent regulatory efforts globally, such as the U.S. GENIUS Act and frameworks in the European Union, Singapore, United Arab Emirates, and Japan.

The global stablecoin market cap stands at $232 billion as of May 2025, with stablecoin trading volume reaching $27.6 trillion in 2024. In Hong Kong, Tether remains the preferred stablecoin among OTC trading shops. The new law is part of efforts to rebuild trust in the sector following the collapse of the JPEX exchange in 2023.

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